-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QMeatLk0+z5uAh64TZyaKIcgqhqJk+Or8pD22A8Oyr18vMAg4J4EbjWCwINCMSeu R8eNS6tgCwHKcMvh++cUuA== 0001157523-06-004128.txt : 20060426 0001157523-06-004128.hdr.sgml : 20060426 20060426162654 ACCESSION NUMBER: 0001157523-06-004128 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060426 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060426 DATE AS OF CHANGE: 20060426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREATBATCH, INC. CENTRAL INDEX KEY: 0001114483 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 161531026 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16137 FILM NUMBER: 06781429 BUSINESS ADDRESS: STREET 1: 9645 WEHRLE DRIVE CITY: CLARENCE STATE: NY ZIP: 14031 BUSINESS PHONE: 716-759-5600 MAIL ADDRESS: STREET 1: 9645 WEHRLE DRIVE CITY: CLARENCE STATE: NY ZIP: 14031 FORMER COMPANY: FORMER CONFORMED NAME: WILSON GREATBATCH TECHNOLOGIES INC DATE OF NAME CHANGE: 20000511 8-K 1 a5133672.txt GREATBATCH, INC. 8-K U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) April 26, 2006 -------------- GREATBATCH, INC. ---------------- (Exact name of registrant as specified in its charter) Delaware 1-16137 16-1531026 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 9645 Wehrle Drive, Clarence, New York 14031 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (716) 759-5600 -------------- Not Applicable --------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240 14a-12). [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). Item 2.02. Results of Operations and Financial Condition --------------------------------------------- On April 26, 2006, Greatbatch, Inc. (the "Company") issued a press release announcing its results for the fiscal quarter ended March 31, 2006. A copy of the release is furnished with this report as Exhibit 99.1 and is incorporated by reference into this Item 2.02. The information contained in this report under Item 2.02 is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section. The information contained in this report under Item 2.02 shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits --------------------------------- (d) Exhibits 99.1 Press Release dated April 26, 2006. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: April 26, 2006 GREATBATCH, INC. By: /s/ Thomas J. Mazza ------------------------------- Thomas J. Mazza Senior Vice President and Chief Financial Officer EXHIBIT NUMBER DESCRIPTION - ------ ----------- 99.1 Press Release of Greatbatch, Inc. dated April 26, 2006. EX-99.1 2 a5133672ex991.txt GREATBATCH, INC. EXHIBIT 99.1 Exhibit 99.1 Greatbatch, Inc. Reports Record Quarterly Sales; Increases Sales and Earnings Guidance for 2006; Margins Show Strong Improvement on Solid Sales Growth Over Prior Year CLARENCE, N.Y.--(BUSINESS WIRE)--April 26, 2006--Greatbatch, Inc. (the "Company") (NYSE: GB) today reported its results for the first quarter ended March 31, 2006. Business Highlights -- Achieved record quarterly sales for: -- Total Company - sales of $68.1 million, up 21 percent from $56.4 million in the first quarter of 2005 -- Implantable Medical Components - sales of $57.6 million, up 20% in the first quarter, driven by strong sales of batteries, feedthroughs and assembly products -- Electrochem Commercial Power - sales of $10.5 million, up 24% led by strong growth in the oil and gas, ocean and seismic markets -- Diluted earnings per share under U.S. Generally Accepted Accounting Principles (GAAP) increased by 47% to $0.28. Earnings per share, excluding move-related expenses, severance costs and stock-based compensation under FAS123R, increased by 37% to $0.37. (See Table A for reconciliation to GAAP). -- Operating margin, excluding move-related expenses, severance costs and stock-based compensation, improved by 470 basis points in the first quarter to 20.1%. (See TableB for reconciliation). -- Facilities update - moves of shield assembly, filtered feedthroughs (Carson City) and feedthroughs (Columbia) to Tijuana are proceeding as planned. Carson City move expected to be complete by the middle of 2006 and Columbia move expected to be complete in 1st half of 2007. Currently working with an existing customer on the planning phase for additional assembly volume to be completed in Q4 2006. -- Signed a new supply agreement with Sorin/ELA. This new comprehensive agreement represents a significant incremental revenue opportunity over the 5-year term, as it includes provisions for all of the Greatbatch technologies. The renewable agreement has an initial term ending on December 31, 2010. -- Raising 2006 full year financial guidance as follows: -- Full year 2006 projected sales are being increased to a range of $260 - $270 million -- Full year 2006 Earnings Per Share (EPS) estimates are being increased to a range of $1.15 - $1.25, exclusive of charges for move-related expenses and incremental stock-based compensation under FAS123R (see TableA for reconciliation to GAAP). Edward F. Voboril, Chairman and Chief Executive Officer commented, "We are extremely pleased with the record sales results and the strong start to 2006. We delivered better than expected sales results across the breadth of our medical and commercial products. We experienced solid growth from both our domestic and international customer base, which reflects the strength of our position in these markets. The improving margins reflect greater operating leverage from the increased sales volume. In addition, the consolidation of our medical power manufacturing operations coupled with improved utilization at our Tijuana facility, combined to increase our operating margins in the quarter (exclusive of move-related expenses and stock-based compensation) to approximately 20%. Given the strong start to the year, we are increasing our 2006 financial outlook, for both sales and earnings. We remain confident that the strategic initiatives we have put in place to expand our product offering and reduce our manufacturing costs will allow us to continue to advance our competitive position in the marketplace," Voboril concluded. Sales Summary The following table summarizes the Company's sales by business unit and major product line for the first quarters of 2006 and 2005 (in thousands): Business Unit/Product Lines 2006 2005 % 1st Qtr 1st Qtr Change - ---------------------------------------------------------------------- Implantable Medical Components ("IMC"): ICD Batteries $12,679 $10,751 +18% Pacemaker & Other Batteries 5,787 5,255 +10% ICD Capacitors 3,568 4,297 -17% Feedthroughs 16,288 13,682 +19% Enclosures 6,340 6,547 -3% Other Medical 12,918 7,333 +76% ------ ------ ---- Total Implantable Medical Components 57,580 47,865 +20% Electrochem Commercial Power ("ECP") 10,527 8,493 +24% ------ ------ ---- Total Sales $68,107 $56,358 +21% ====== ====== Profit & Loss Summary The following table summarizes selected information derived from the condensed consolidated statement of operations for the first quarters in 2006 and 2005 (in thousands): 2006 2005 % 1st Qtr 1st Qtr Change - ---------------------------------------------------------------------- Gross Profit(1) $27,634 $19,829 +39% Gross Margin 40.6% 35.2% SG&A Expenses $9,015 $6,766 +33% SG&A Expenses as % of Sales 13.2% 12.0% RD&E Expenses, net $5,898 $4,401 +34% RD&E Expenses, net as % of Sales 8.7% 7.8% Operating Income $10,052 $6,274 +60% Operating Margin 14.8% 11.1% Effective Tax Rate 34.5% 30.0% (1) Gross profit has been revised to include the effect of amortization of intangible assets, which was previously included in operating expenses below the gross profit calculation. The increase in gross margin of 540 basis points was primarily due to lower assembly manufacturing costs at the Tijuana facility, reduced excess capacity costs due to the closure of the former capacitor plant and favorable manufacturing volume variances. The increase in SG&A expenses is primarily due to stock based compensation, increased cost at our Tijuana location, as well as higher selling and marketing related expenses. The increase in RD&E expenses is primarily due to increased headcount in support of new development programs and decreased reimbursement on new product development projects. RD&E as a percentage of sales is expected to continue to increase to a range of 9% to 10% for the full year 2006, in support of new development initiatives. Outlook Considering the first quarter performance, the Company is revising its guidance as follows (in millions, except per share amounts): Current Previous - ---------------------------------------------------------------------- Sales: Medical $224 - $232 $210 - $228 Commercial $ 36 - $ 38 $ 35 - $ 37 ----------- ----------- Total Sales $260 - $270 $245 - $265 GAAP EPS $0.60 - $0.70 $0.40 - $0.60 Adjusted EPS $1.15 - $1.25 $0.95 - $1.15 Effective tax rate 34% 34% Capital expenditures $22 - $27 $22 - $27 Table A: GAAP EPS Reconciliation - ---------------------------------------------------------------------- 2006 2005 2006 1st Quarter 1st Quarter Full Yr Guidance - ---------------------------------------------------------------------- GAAP earnings per share: $0.28 $0.19 $0.60 - $0.70 Carson City facility closure/relocation 0.03 0.01 0.06 - 0.06 Columbia facility closure/relocation 0.02 - 0.17 - 0.18 Medical power facility closure/relocation 0.01 - 0.02 - 0.03 Asset dispositions and other 0.01 0.07 0.08 - 0.13 ---- ---- ----------- Sub-total other operating expense 0.07 0.08 0.33 - 0.40 Incremental stock-based compensation 0.02 - 0.12 - 0.15 Earnings per share - adjusted $0.37 $0.27 $1.15 - $1.25 Diluted weighted average shares outstanding (000's) 26,000(1) 22,000 22,000 (1) Includes 4.2 million shares for the dilutive effect of the convertible notes into common stock Table B: Operating Income Reconciliation ($000's) - ---------------------------------------------------------------------- 2006 2005 2006 1st Quarter 1st Quarter Full Yr Guidance - ---------------------------------------------------------------------- Operating Income as reported: $10,052 $6,274 $21,000 - $26,000 Carson City facility closure/relocation 1,228 195 2,000 - 2,000 Columbia facility closure/relocation 922 - 5,700 - 6,000 Medical power facility closure/relocation 515 33 700 - 1,000 Asset dispositions & other 4 2,160 2,700 - 4,300 - ----- ------------- Sub-total other operating expense 2,669 2,388 11,100 - 13,300 Incremental stock-based compensation (1) 950 - 4,000 - 5,000 Operating Income - adjusted $13,671 $8,662 $39,500 - $43,000 Operating margin - adjusted 20.1% 15.4% 15% - 16% (1) Approximately 80% in SG&A; 12% RD&E; 8% Cost of Sales Conference Call The Company will host a conference call today, Wednesday, April 26, 2006 at 5:00 p.m. E.T. to discuss its quarterly results. The scheduled conference call will be webcast live and is accessible through the Company's website at www.greatbatch.com. The webcast will also include presentation visuals. The webcast will be archived on both websites for future on-demand replay. An audio replay will also be available beginning from 7:00 p.m. E.T. on April 26, 2006 until May 5, 2006. To access the replay, dial 888-286-8010 (U.S.) or 617-801-6888 (International) and enter the passcode 41002347. Forward-Looking Statements Some of the statements in this press release and other written and oral statements made from time to time by the Company and its representatives are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and involve a number of risks and uncertainties. These statements can be identified by terminology such as "may," "will," "should," "could," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," or the negative of these terms or other comparable terminology. These statements are based on the Company's current expectations. The Company's actual results could differ materially from those stated or implied in such forward-looking statements. Risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements include, among others, the following matters affecting the Company: dependence upon a limited number of customers; customer ordering patterns; product obsolescence; inability to market current or future products; pricing pressure from customers; our ability to timely and successfully implement our cost reduction and plant consolidation initiatives; reliance on third party suppliers for raw materials, products and subcomponents; fluctuating operating results; inability to maintain high quality standards for our products; challenges to our intellectual property rights; product liability claims; inability to successfully consummate, integrate and protect against liabilities arising from acquisitions; unsuccessful expansion into new markets; competition; inability to obtain licenses to key technology; regulatory changes or consolidation in the healthcare industry; and other risks and uncertainties described in the Company's Annual Report on Form 10-K, and in other periodic filings with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking information in this press release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise. About Greatbatch, Inc. Greatbatch, Inc. (NYSE: GB) is a leading developer and manufacturer of critical components used in implantable medical devices and other technically demanding applications. Additional information about the Company is available at: www.greatbatch.com. GREATBATCH, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In thousands except per share amounts) Three months ended March 31, 2006 2005 --------- -------- Sales $68,107 $56,358 Cost of sales 39,515 35,571 Amortization of intangible assets - cost of sales 958 958 Selling, general and administrative expenses 9,015 6,766 Research, development and engineering costs, net 5,898 4,401 Other operating expense, net 2,669 2,388 --------- -------- Operating income 10,052 6,274 Interest expense 1,135 1,131 Interest income (1,192) (575) Other (income) expense, net (44) - --------- -------- Income before income taxes 10,153 5,718 Provision for income taxes 3,503 1,715 --------- -------- Net income $ 6,650 $ 4,003 ========= ======== Diluted earnings per share $ 0.28 $ 0.19 GREATBATCH, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands) ASSETS March 31, December 31, 2006 2005 --------- ------------ Current assets: Cash and cash equivalents $ 38,888 $ 46,403 Short-term investments 66,018 65,746 Accounts receivable, net 39,857 29,997 Inventories 48,200 45,184 Refundable income taxes - 928 Deferred income taxes 6,257 6,257 Prepaid expenses and other current assets 1,601 1,488 --------- ------------ Total current assets 200,821 196,003 Property, plant, and equipment, net 97,368 97,705 Intangible assets, net 59,185 60,143 Goodwill 155,039 155,039 Other assets 4,399 4,021 --------- ------------ Total assets $516,812 $512,911 ========= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 15,501 $ 13,678 Accrued expenses and other current liabilities 19,352 29,903 Current portion of long-term debt 165 464 --------- ------------ Total current liabilities 35,018 44,045 Long-term debt, net of current portion - - Convertible subordinated notes 170,000 170,000 Deferred income taxes 31,969 30,261 --------- ------------ Total liabilities 236,987 244,306 --------- ------------ Stockholders' equity: Preferred stock - - Common stock 22 22 Additional paid-in capital 220,158 215,614 Retained earnings 59,690 53,039 Accumulated other comprehensive loss (45) (70) --------- ------------ Total stockholders' equity 279,825 268,605 --------- ------------ Total liabilities and stockholders' equity $516,812 $512,911 ========= ============ CONTACT: Greatbatch, Inc. Anthony W. Borowicz, 716-759-5809 tborowicz@greatbatch.com -----END PRIVACY-ENHANCED MESSAGE-----